Protecting workers in the informal economy

Billions of people globally make a living within the so-called ‘informal economy’, employment which takes place without the protection of formal arrangements such as contracts or regulated working conditions. In some low- to middle-income countries, the proportion of workers employed informally rises from a global figure of 60 per cent to around 90 per cent. This equates to many individuals not only working without formal protection, but often without the knowledge, training, or conditions that support safe and healthy work.

These workers also often face multiple and cumulative risks. Some of the most prevalent sectors for informal work are the most hazardous, such as agriculture, construction, or waste management. The informal workforce, meanwhile, is disproportionately represented by women, migrants, younger workers and older workers – workers who are already vulnerable to occupational hazards.

Addressing hazards in the informal economy is not straightforward. One challenge is a shortage of robust data. A lack of access to informal workers makes it hard to gather comprehensive and comparable evidence about occupational safety and health (OSH) risks, which then prevents the development and implementation of evidence-based solutions to support workers. Data challenges are compounded by the fact informal workers are harder to reach, given that they are not covered by legislative and regulatory OSH frameworks.

Is formalisation the solution? 

Perhaps the most obvious means of reducing the OSH risks faced by informal workers is to formalise their working arrangements. In this way, through the establishment of contractual employer-employee relationships, informal workers are brought within the remit of OSH legislation. Both the United Nations (UN) and the International Labour Organization (ILO) support this approach: the UN’s Sustainable Development Goal eight includes a target to ‘promote development-oriented policies that […] encourage the formalization and growth of micro-, small-, and medium-sized enterprises’, while ILO Recommendation 204, adopted in 2015, concerns ‘the transition from the informal to the formal economy’. Formalisation was at the forefront of the agenda at the 2025 International Labour Conference, where discussions emphasised the need for urgent action to reduce informal work.

Although the benefits of formalisation are widely recognised, there are multiple challenges associated with it. Informal workers may be unaware or unconvinced of the benefits of formalisation or feel that incentives to formalise are lacking. Additionally, even if workers or businesses are willing to formalise their operations, they may face barriers in doing so. For example, fees associated with the formalisation process may be unaffordable, or the process may require skills and resources such as internet access and/or digital capabilities that workers do not possess. 

Particularly in developing countries, governments may not be able to fully enforce labour laws and may struggle to regulate even formal companies. Where enforcement and accountability are lacking, OSH challenges are likely to persist even in the formal economy. 

Formalisation may also have unintended negative consequences for workers. For instance, it may lead to a reduction in workers’ incomes, with potential knock-on effects on workers’ living conditions and health (as higher incomes are generally associated with better health). 

Alternative solutions to reduce risks

Formalising employment is not the only option for reducing OSH risks. In 2025, RAND Europe conducted an evidence review on OSH challenges in the informal economy for IOSH, which highlights other promising approaches to improving OSH in the informal economy. These include either programmes that extend formal protections or services to those in informal work, or those that support the collective organisation of informal workers.

Making healthcare or social security schemes more affordable is one way to improve the general health of workers who would otherwise find costs prohibitive. Given that social protection is a more reactive than preventative measure when it comes to OSH, a next logical step is the provision of specific services such as training, safety equipment, or health screening.

Non-governmental initiatives such as the Self-Employed Women’s Association (SEWA) in India, meanwhile, provide a precedent for organising groups of informal workers by providing affordable healthcare, pensions, childcare, insurance and credit. Despite the success of these initiatives (in fact, precisely because of them), they can inadvertently shift the burden away from governments and local authorities who should have responsibility. Less established initiatives may also struggle to maintain momentum in the absence of coordination and backing at national level.

Further research is needed to better understand ‘what works’ to support the OSH of informal workers, including rigorous impact evaluations to assess the effectiveness of policies and interventions. However, it is clear that a multi-faceted approach is needed, including wider efforts to support informal workers alongside formalisation. Governments and local authorities should now be focused on finding ways to capitalise on the effective elements of promising initiatives and deliver them to informal workers who need them most.